The destructive tentacles of disgraced fund manager Neil Woodford continue to weave their way through the investment management industry like a gory scene from sci-fi horror film Alien.Having brought down his own investment empire – Woodford Investment Management – and in the process reduced tens of thousands of investors’ fund holdings to rubble, the 59-year-old fund manager is now in danger of truncating the career of Mark Barnett, his former protege at Henley-on-Thames asset manager Invesco.
Unless Barnett can quickly turn around the fortunes of the multi-billion pound Invesco investment funds he inherited from Woodford in early 2014, he could well be the latest victim of the debacle that has already seen flagship fund Woodford Equity Income dismembered; investment trust Patient Capital handed over to Schroders to manage; and dealings in Woodford Income Focus suspended.
Earlier this month, Barnett – dubbed ‘Son of Woodford’ by experts – and Invesco were dealt a knee-buckling blow when fund ratings agency Morningstar downgraded both Invesco Income and Invesco High Income amid concerns about their exposure to smaller companies – and in particular illiquid stocks. These are the two biggest funds Barnett manages for Invesco.
‘Barnett’s continued intent on investing in smaller names gives us cause for concern,’ said Morningstar analyst Peter Brunt. Chillingly, as far as Invesco investors are concerned, it was these very same issues which sparked the beginning of the end for Woodford.
Given Morningstar’s importance as an assessor of investment funds – downgrades normally trigger a wave of selling – Invesco’s response was swift. It rushed out an article from Barnett insisting his funds were ‘appropriately positioned, well diversified and able to generate liquidity should investors wish to buy or sell’. He also referred to the oversight of his funds by other departments within Invesco.